March, 2001

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March, 2001
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Presentation Outline

• Performance Highlights Dec 2000
• EC Business
• Cement
• Other Segments
• Summary of Dec 2000
• Update on Cement Restructuring
• Outlook for the Year
• LT Information Technology Limited

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(No Transcript)
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Environment

• Lacklustre investment climate
• Negative growth in capital goods
• Continuing drought situation in some states
• Agricultural growth slows down
• Reforms related issues
• Financial closure of IPPs languishing
• Delays in Implementation of Highway Projects
• Oil pool deficits affects investment in oil and
  gas sectors
• Pricing Subsidy issues of Fertiliser industry

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Environment (Contd)

• Fewer Opportunities in select sectors
• Very low investment in core industries viz.steel,
  paper, fertilisers, petrochemicals, etc.
• Opportunities mainly in power, refinery and
  infrastructure sectors
• Domestic capital goods industry suffers from
  negative protection
• Increased competition due to limited opportunites
  in the region

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Operating Divisions
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E C
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EC - A Review

• Order inflows mainly from power and
  infrastructure sectors
• Heavy engineering division books orders worth Rs
  720 mn for export of equipments to the middle
  east, Malaysia, south Africa
• Margins affected by projects below threshold
  completion and lower level of activity in EC
  projects

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Major Orders Booked Domestic
Rs.Millions
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Major Orders Booked International
Rs.Millions
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EC - Financial Performance
Rs. Billions
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Cement
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Cement - A Review

• Very low growth due to drought in many states and
  insipid investment in projects
• Continuing supply overhang affects price
  realisation
• Significant price improvement during December
• Increase in petroleum prices, royalty and customs
  duty impact cost of production
• Improvements in operating efficiencies help
  mitigate the effect of cost increases

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Mumbai Price of Cement (Rs./Bag)
180
(Rs/BAG)
170
NET PRICE
160
150
140
130
120
110
AVG . ADJUSTED PRICE
100
95
97
98
99
2000
96
NET PRICES
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Cement-Financial Performance
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Other Operating Divisions
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Other Divisions-Financial Performance
Rs. Billions
Electricals Division
Diversified Businesses
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Summary Dec 2000
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Segmentwise Revenue
FY00
FY99
Dec 2000
Dec 99
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Summarised P L
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Outlook for FY 2001
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Outlook for FY 2001

• EC Segment
• A healthy order backlog of over Rs. 80 Billion
• EC Order booking expected to grow by more than
  25 as compared to previous year
• Revenue growth of 8-10 expected for the year
• Cement
• Prices are expected to rule firm, while
  consumption growth would be slower affecting
  volumes
• Restructuring exercise making steady progress
  
• Gujarat earthquake could depress the above
  expectations moderately

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EC Order Prospects - Domestic
Rs.Million
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EC Order Prospects - Overseas
Rs.Million
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Update on Cement Restructuring
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Cement Restructuring

• Scheme of demerger under finalisation for filing
  with the High Court
• Initial indication of values to be available from
  possible candidates for partnership
• Further progress with short-listed candidates
• Strategic Partner to reach equal shareholding
  progressively depending upon
• growth plans for cement business and timing of
  contribution

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Cement - Proposed Ownership Structure

• LTs cement business would demerge into a wholly
  owned subsidiary where post demerger, LT would
  hold 75 and LT shareholders 25
• A strategic partner would be inducted with
  shareholding in excess of 26
• The strategic partner would achieve above
  shareholding through a combination of secondary
  purchases and capital infusion into the cement
  company
• LT would hold 50 shareholding on completion of
  Stage I
• Over a period of 2-3 years, LT and strategic
  partner would reach equal shareholding through
  further secondary purchases and capital infusion
• The time-frame and exact shareholding pattern
  would be agreed with the strategic partner and
  would depend upon
• the joint vision of LT and strategic partner
• the value for cement business

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Structuring Considerations

• Growth requirements of Cement Business
• Value Optimization
• Needs of other Businesses

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Structuring Considerations Growth requirements
of Cement Business

• Cement business needs to grow its market share
  from its current 13
• to facilitate consolidation which would improve
  the economics
• to be a meaningful player in a consolidated
  market
• to benefit from the improved economics as a
  result of consolidation
• Growth needs substantial capital investments
• Equity investment required to increase market
  share to 17 - 20 by FY06 is
  very large
• LT not to commit further capital to cement
  business
• to maintain balance in capital allocation

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Structuring Considerations Value Optimisation

• Full value realisation with committed equality
  with Partner
• LT shareholders would participate in a larger
  entity without contributing to capital
• LT shareholders would benefit from up side
  potential in valuation arising from benefits of
  consolidation
• Current EBITDA levels have deteriorated on real
  terms resulting in poor returns
• Consolidation would facilitate improvement in
  EBITDA levels to at least return cost of capital
• Valuation even at EBITDA multiples of mature
  markets would be significant improvement
• Listing would provide benchmark valuation for
  LTs investments and also provide an exit for
  LT shareholders

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Structuring ConsiderationsNeeds of other
Businesses

• High Net Worth is the foundation for EC growth
  ambitions
• Net Worth is one of the essential qualification
  requirements for large EPC contracts
• Large Net Worth also brings additional
  evaluation points
• Demerger of cement business would result in
  reduction of Net Worth in LT
• LTs substantial shareholding in cement company
  would mitigate against any reduction in Net Worth
• The Net worth of the cement business increases
  substantially with capital infusion by strategic
  partner
• Through consolidation of accounts, LT could
  account for its share of Net worth in the cement
  business
• The resultant Net worth of LT will actually
  increase post-demerger
• Cash requirements for growth of EC and I.T
  businesses be met through partial divestment in
  stake in cement company

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Information Technology
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• Moving up the value chain

Current Status
Future

• Product enhancements for software company
• - keeping up with fast trends
• End to end offerings
• Turnkey Long Term Service Agreements
• - Small and Medium Enterprise I.T.
  Projects
• Productised Services
• - Net based opportunities
• - Integration enterprise system
• - Knowledge Management Modules

• Enterprise Resource Planning
  installations
• Significant share of e-Commerce work.
• Domain Thrust areas
• Communication
• Manufacturing
• Utilities
• Financial services
• Services
• Large Relationships
• Samsung, ED Jones, Sony, Hitachi

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LTITL - Financial Performance
Rs. Billions
As of March 31, 2000
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Thank You